Give us a break, urges games industry

According to TIGA, the sector is in decline and faces “significant challenges” as international competitors with state support seize market share.

In new research published today, the trade body said headcount in the UK video games development industry has fallen by 9 per cent since 2008. It also claims that the sector’s contributions to GDP and tax revenues have fallen by 9 per cent.

Richard Wilson, chief executive of TIGA, said: “The UK videogames industry is an industry of the future – high tech, highly skilled and export oriented.

“If the coalition Government is serious about its intention of rebalancing the economy then it should invest in the UK video games industry by introducing a tax break for games production.

“Games tax relief would create jobs, boost investment and generate much needed tax revenue for the Government.”

He added: “The coalition recognises the effectiveness of tax breaks because it already supports the UK film industry with a tax credit.

“It should adopt the same successful policy for the video games industry to enable our sector to make a powerful contribution to UK economic growth.”

In Yorkshire, the industry is made up of around 40 businesses which contribute an estimated £50m a year to the regional economy. These include three of the top 100 most profitable studios in the world, Sumo Digital, Rock Star Leeds, and Team 17, according to Yorkshire’s industry network group, Game Republic.

The region’s developers have produced big-selling games such as Worms, Grand Theft Auto Chinatown Wars and Broken Sword.

TIGA said its research shows that the sector’s direct and indirect contribution in tax revenues fell by a total of £55m between 2008 and 2010. The sector’s contribu tion to GDP declined by £132m over the same period, it added.

The association said UK companies are now operating on “an uneven international playing field”, with overseas government support continuing to grow.

For example, TIGA said more than 20 states in North America now provide incentives for the industry.

The association claims that games UK tax relief would create more than 1,300 studio jobs and increase investment in games studios by £138m.

It also claims that the industry’s tax revenues and GDP contribution would rise by £126m and £307m respectively, indirectly creating more than 2,400 jobs.

TIGA said that more than 9,500 jobs would be created or safeguarded over the next five years with the relief.

But without it, the association warns that current rates of decline will continue, leading to a shedding of around a quarter of the industry’s total workforce by 2015.

Jason Kingsley, chairman of TIGA, said: “The global video games market is expected to grow from $52.5bn in 2009 to $86.8bn in 2014. However, this growth will happen overseas if we do not invest today. The UK is exceptionally good at developing video games but we are not competing on a level playing field. Other governments around the world are backing their video games industries.

“The coalition is not. Of course the Government must tackle the deficit, but it must also have a strategy for growth. TIGA’s games tax relief will support economic growth and tax revenues. We urge the Government to review our evidence and reopen the discussions on games tax relief.”

The previous Government introduced the tax break in March 2010, but it was rejected by the coalition later in the year.

A Treasury spokesman said: “Decisions on tax are a matter for the Chancellor in the Budget. A major package of reforms announced in the June 2010 Budget are aimed at creating the most competitive corporate tax regime in the G20, benefiting all businesses, including the UK video games industry.

“The Government is currently conducting a Growth Review that aims to ensure all Government Departments are doing everything they can to help the country grow and recover from recession.”